Business Monitor International


China Mining Report

Published 03 September 2014

  • 116 pages
 
$1,295.00
China Mining Report

BMI View: More Chinese miners will come under duress from the economic slowdown in China over the coming years. Falling mineral prices and Beijing's gradual embrace of free market economics will threaten the survival of many small and private min ing operations.

We believe the economic slowdown in China will turn a decade-long mining boom into bust for many domestic miners. With cost containment being the key lever in the face of falling commodity prices, Chinese miners will be forced to recalibrate their investment approach over the coming quarters. While state-owned miners are generally more insulated from the weakness in mineral prices, Beijing's gradual embrace of free market economics should pave the way for some much needed consolidation and restructuring in the mining industry.

In a bid to tame overcapacity and reduce environmental pollution, the Chinese government plans to shut down smaller and inefficient mines, while mid-sized mines will be merged and production consolidated into giant, vertically integrated state-owned outfits. For instance, there is a national drive in the coal sector to create 14 giant 'coal-power-rail' hubs with each having a production capacity of at least 100mn tonnes per annum (mntpa). That said, the production losses that will inevitably occur with the closure of smaller mines will give way to output gains down the road due to the efficiency gains associated with bigger and more integrated mining operations.

Mixed Fortunes
China - Select Minerals Production (% chg y-o-y)

The downshift in China's economy is set to force a growing number of miners to scale back their ambitions as they struggle to maintain profit margins in the face of falling mineral prices. However, we expect miners operating in certain sectors to prove more resilient. For instance, lead mining will be less affected given its primary use in the production of lead-acid batteries. In contrast, other minerals such as iron ore and bauxite will experience weaker...

Table of Contents

BMI Industry View
7
SWOT
10
Industry Forecast
12
Bauxite: Pushing For Supply Security
12
Growth To Slow, But Production Won't Collapse
13
Seaborne Reliance Not Going Away
13
Risk To Outlook
14
Table: China - Bauxite Production Forecast
15
Coal: Digging Continues, Despite Green Push
15
Efficiency Gains With Consolidation Push
18
Table: China - Select Coal Mining Projects
19
Taming Pollution
19
Table: China - Coal Production Forecast
20
Copper: Supported By Self-Sufficiency Push
21
Table: China - Select Copper Projects
22
Table: China - Copper Production Forecast
23
Gold: Growth To Continue On Robust Appetite
23
Chinese Miners Better Insulated
24
Gold Bulls In Asia
24
Compelling Case For Gold In China
25
Struggling To Increase Domestic Output
26
Table: China - Largest Gold Projects
27
Heading Abroad For All That Glitters
28
Table: China - Gold Production Forecast
29
Iron Ore: Growth To Lose Momentum
30
Table: China - Select Iron Ore Projects
34
Table: China - Iron Ore Production Forecast
34
Lead: Autos Sector To Lend Support
35
Table: China - Select Lead Mining Projects
36
Table: China - Lead Production Forecast
37
Nickel: Dimming Outlook
37
Table: China - Select Nickel Projects
39
Table: China - Nickel Production Forecast
39
Tin: Yunnan Tin Takes Charge
39
Risks To Outlook
41
Table: China - Tin Production Forecast
42
Zinc: Little Impetus For Expansion
42
Domestic Consumption Offers Little Relief
43
Table: China - Zinc Production Forecast
44
Industry Risk Reward Ratings
45
Risk/Reward Ratings
45
Rewards
45
Industry Rewards
45
Country Rewards
45
Risks
46
Industry Risks
46
Country Risks
46
Table: China - Mining Industry Value & Minerals Production Forecasts
47
Asia - Q3 2014
47
Table: Asia - Mining Risk/Reward Index
51
Regulatory Development
52
Table: Asia - Mining Regulatory Scorecard
55
Table: Political Overview
55
Commodities Forecast
57
Commodity Strategy
57
Iron Ore: Chinese Stimulus Not A Game Changer
57
Steel: Gradual Rationalisation Insufficient To Boost Prices
59
Aluminium: Recent Rally Unlikely To Persist Into H214
60
Copper: Bearish Forecast Appears Well Placed
61
Lead: Picking Up Autos Sector Tailwinds
62
Nickel: Recent Rise To Fall Back In H214
63
Zinc: Potential Test Of Resistance In Coming Weeks
65
Table: Select Commodities - Performance & BMI Forecasts
67
Competitive Landscape
68
Table: China - Key Financial Data For Select Listed Mining Companies
69
Company Profile
70
Aluminum Corporation of China (Chalco)
70
Company Overview
71
Latest Financial Results
71
Table: Chalco - Key Financial Data
73
China Shenhua Energy
75
Table: Shenhua Energy - Key Financial Data
77
Jiangxi Copper
79
Table: Jiangxi Copper - Key Financial Data
82
Shandong Gold
84
Table: Shandong Gold - Key Financial Data
86
Regional Overview
88
Asia - Q3 2014
88
Challenges
88
Opportunities
91
Global Industry Overview
96
Challenges
96
Table: Mining - Select M&A Deals
100
Cause For Optimism
103
Methodology
110
Industry Forecast Methodology
110
Sources
111
Risk/Reward Rating Methodology
112
Table: Weighting Of Indicators
114

The China Mining Report has been researched at source and features Business Monitor International (BMI)'s mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's China Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in China.

Key Benefits

  • Use BMI's independent industry forecasts on China to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in China's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in China.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

Executive Summary

Summary of BMI's key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Business Environment Ratings

BMI's Mining Business Environment Ratings provide a country-comparative Risk-Reward Ratings index aimed at investors (mining companies and support service providers) in the regional mining market. The ratings methodology makes sophisticated use of over 40 industry, economic and demographic data points and is part of BMI's integrated Country Risk-Industry Ratings products.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

BMI Industry Forecasts

Historic data series (2009-2012) and forecasts to end-2017 for all key industry and economic indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast. Indicators include:

  • Mining Industry: Industry size (US$mn), real growth (%), % of GDP, employment ('000), workforce as % of total workforce, average wage (US$).
  • Output:Production volumes ('000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (US$mn) for all major metals, minerals, ores and gems mined in each state .
  • Commodity Markets: Global demand, supply, stocks and benchmark prices (US$) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI Macroeconomic Forecasts

BMI forecasts to end-2017 for all headline macroeconomic indicators, including real GDP growth (%), inflation (%), fiscal balance (% of GDP), trade balance (US$bn), current account (US$bn) and external debt (US$bn).

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing by US$ sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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